Cutting tourism options doesn’t create housing
In 2012, you might recall, 150,000 letters were issued by Revenue Commissioners in a trawl to inform pensioners that they may owe tax which they under, or not at all, declared. The tone of the brusque missive, which created a Joe Duffy moment, put the fear of God into older people, resulting in a belated apology from then tax boss Josephine Feehily after more than 55,000 complained of their fear in receiving the missive. The tax remained due, however.
The letter came about after a sampling of hundreds of cases revealed that many pensioners genuinely believed that the State pension was not subject to tax, and therefore, they didn’t declare it as income.
In fact, all income is declarable, but over 65s don’t pay tax on the first €18,000 of their money, irrespective of source. If you’re only subsisting on the state pension, you didn’t have a problem, but around 115,000 were earning above this threshold with the addition of company pensions, investments, dividends or even employment, and the €18,000 tax free threshold doesn’t begin after the State pension is paid; it is part of it.
This genuine misunderstanding didn’t stop the tax from being collected; ignorance of the law is no defence, after all.
In 2017 we witnessed a similar, “Ah sure it’s only a few bob” approach taken by many Airbnb landlords, although for some, probably not as innocently as the pensioners. There were those who were under the impression that “a bit of cash on the side” doesn’t really count, or, if it does, then it shouldn’t. It’s their house after all.
Unsurprisingly, Revenue doesn’t agree. Nor does it have a, ‘Only a few bob’ category for tax avoidance.
It issued a stern guidance note to ‘remind’ hosts of this, reiterating the rules of its bona fide tax avoidance scheme — Rent-a-Room Relief — which doesn’t apply to short-term lettings. This hoovered up some tax for the state and involuntarily exited some hosts from the website.
Airbnb is considered a double-edged sword in many countries. On one hand, it provides much needed choice for tourists; on the other it depletes hotels of income and a populace of potential rental accommodation.
Enter, stage right, Eoghan Murphy. Never one to find a straight-forward solution when a complicated, knee-jerk one will do, Airbnb is to be severely curtailed. After being thrown out to a Commission (this allows a Bart Simpson response when it doesn’t work – “it wasn’t me, nobody saw me do it…”), we are to follow other cities like Berlin and Barcelona and place restrictions on the use, or night numbers of properties used for short lets.
It’s the solution to the housing crisis, apparently. Thousands of apartments and houses, currently lucratively squeezing easy profits for landlords, will be returned to a struggling market, to be let just as enthusiastically to HAP tenants, students or struggling families.
You’d imagine it simply hadn’t occurred to property owners that such a thing was possible up to now.
The problem is several-fold. Firstly, there’s a reason these owners are using Airbnb. It circumnavigates the onerous responsibilities and lock-ins of permanent letting. Short-term tenants have no rights, and the turnaround means that they’re far less likely to get stuck with a bad tenant. Secondly, they’re paid in advance, so no chasing rents or dealing with the laborious process of eviction or debt-chasing.
Of the hosts, 51pc are ‘multi listed’ hosts according to analytics site AirDNA. This means they are already professional landlords who do not want their houses let to long-term tenants. Forced with having to do so and thus curtail their profit while adding layers of bureaucracy, many may simply sell up instead.
This of course, may have a vicarious result in that they’ll be shunted into a needy property market and some existing renters may take the plunge and buy, thus freeing up their current accommodation. But this is an enormously long winded way of going about it.
No. Banning Airbnb and its ilk is not the solution, but it darn well looks good on paper and gives a populist kick in the behind to a global behemoth.
Its existence is an issue — no question. Of the almost 7,000 properties listed in Dublin alone on short-term letting sites (Airbnb is just one, so I’m using the term ubiquitously), half are in the ‘entire home’ category. The rest are spare rooms and sofas and even they are being targeted.
Average monthly income is around €2,991 per host if they flog it, with the top 10 earners (professionals undoubtedly), earning €139,000 each. Most earn a fraction of this, and only as a nixer.
So, what will happen before all these alleged houses return to market? Firstly, the ancillary businesses will collapse — the cleaners, administrators, laundries who benefit. Local authorities will need to employ more planners and policemen. Hosts may revert to State support as their income disappears. Hotel prices will rise as they become the only game in the tourism industry again.
Curtailing tourism options doesn’t create new housing; it doesn’t confer a right to housing and continues to place the burden for providing housing on private property owners instead of where it belongs — with government. Airbnb has called the measure a ‘false promise’.
One of many.
Banning Airbnb and its ilk is not the solution, but it darn well looks good on paper